Jeremey Frost | Market Minute | 806-484-1214
USDA Friday Trade Idea Basket
PROTECTION + REOWNERSHIP
FRI. SEP. 11 | 11:00 AM CT
DEC CORN - SEP. 9 DELAYED
$5.2800 (-5.5c)
NOV BEANS - SEP. 9 DELAYED
$13.0725 (-9c)
1. DEC CORN CALL-FINANCED FLOOR
CALL-FINANCED
DEC CORN $5.2800 | SEP. 9 DELAYED
Best fit
Unsold corn; the short call is covered by cash grain.
Legs
BUY Dec $5.10 put / SELL Dec $4.70 put / SELL Dec $5.80 call
Execution / management
Choose the call needed to bring the put spread near a 0-5c debit. Protect 25%-50% of expected production.
Risk
Upside is capped at $5.80. The short call creates assignment and margin exposure.
2. NOV BEAN CALL-FINANCED FLOOR
CALL-FINANCED
NOV BEANS $13.0725 | SEP. 9 DELAYED
Best fit
Unsold beans; converts part of the rally value into a floor.
Legs
BUY Nov $12.80 put / SELL Nov $12.20 put / SELL Nov $14.00 call
Execution / management
Target a net package near a 0-10c debit. Sell the call only against bushels you are willing to price.
Risk
Upside is capped at $14.00. The short call creates assignment and margin exposure.
3. CORN REPORT-DAY DIAGONAL
UNDEFINED AFTER FRIDAY
DEC CORN $5.2800 | USDA FRI. 11:00 AM CT
Best fit
Advanced two-expiration report trade.
Legs
BUY Sep. 11 Week-2 $5.30 call / SELL Oct. $5.55 call (25c higher)
Execution / management
Enter as one package. CLOSE OR ROLL BOTH LEGS by 12:30 PM CT Friday - no exceptions.
Risk
After the Week-2 call expires, the October short call is naked and has unlimited upside risk.
4. BEAN REPORT-DAY DIAGONAL
UNDEFINED AFTER FRIDAY
NOV BEANS $13.0725 | USDA FRI. 11:00 AM CT
Best fit
Advanced two-expiration report trade.
Legs
BUY Sep. 11 Week-2 $13.10 call / SELL Oct. $13.70 call (60c higher)
Execution / management
Enter as one package. CLOSE OR ROLL BOTH LEGS by 12:30 PM CT Friday - no exceptions.
Risk
After the Week-2 call expires, the October short call is naked and has unlimited upside risk.
5. DEC CORN 3-WAY REOWNERSHIP
SHORT-PUT RISK
DEC CORN $5.2800 | SEP. 9 DELAYED
Best fit
Corn already sold; willing to reown at $4.80.
Legs
SELL Dec $4.80 put / BUY Dec $5.40 call / SELL Dec $5.90 call
Execution / management
Target a 2c debit to 3c credit. Cap the position at the number of bushels already sold.
Risk
Below $4.80, assignment creates long futures and substantial downside exposure. Rally participation is capped at $5.90.
6. NOV BEAN 3-WAY REOWNERSHIP
SHORT-PUT RISK
NOV BEANS $13.0725 | SEP. 9 DELAYED
Best fit
Beans already sold; willing to reown at $12.50.
Legs
SELL Nov $12.50 put / BUY Nov $13.30 call / SELL Nov $14.30 call
Execution / management
Target a 2c debit to 3c credit. Improve cost with the short call, not by raising the short-put strike.
Risk
Below $12.50, assignment creates long futures and substantial downside exposure. Rally participation is capped at $14.30.
7. Z26/Z27 CORN OVERLAY
CROSS-YEAR / UNDEFINED RISK
Z26/Z27 RELATIVE-VALUE IDEA
Best fit
Historical rally thesis: Z26 should gain substantially relative to Z27.
Legs
BUY Z26 $5.50 call / SELL Z26 $6.00 call / SELL Z27 short-dated $5.50 call
Execution / management
Sell the Z27 short-dated $5.50 call at a 1c target. Exit if the Z26/Z27 spread fails to strengthen.
Risk
The Z26 call spread does not cover the Z27 short call. Upside risk is unlimited unless the call is covered by intended 2027 cash-corn sales.
Trading futures and options involves substantial risk of loss and is not suitable for all investors. There are no guarantees of profit; you may lose all or more than your initial investment. This material is educational and informational only, not a solicitation or individualized recommendation. Prices, strategies and market conditions may change without notice. Short options may be assigned and margin may increase. Consider suitability, financial resources and risk tolerance before acting. Calendar trades must close or roll the October short call before the Week-2 long call expires.
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